Back-to-work scheme is a risk too far

11th November 2011 at 00:00
Long-term young jobless lose out in `payment by results' scenario

While the aims of the Government's flagship work programme - to fight poverty and reduce dependency on benefits - are undoubtedly noble, the methods by which ministers have chosen to achieve them have been less warmly received.

Concerns have been raised that the tough targets and lengthy process are deterring FE organisations from providing the mandatory training to help the unemployed back into work. The offer, while potentially lucrative, poses too much of a risk for many; clients must remain in work for 18 months before providers receive full funding. And they are warning that an unexpected influx of more work-ready - but less financially rewarding - clients could risk marginalising the long-term unemployed, whom the programme was designed to help.

"We have been saying all along that the targets are challenging," said Paul Warner, director of employment and skills at the Association of Employment and Learning Providers. "What we are now looking at, however, is a sustained skewing of the numbers.

"We are getting much higher jobseeker's allowance numbers coming through, but relatively low numbers on the employment and support allowance (ESA, which is for those with a limited capability for work because of a health condition or disability). They are harder to help, but more lucrative."

While a young person aged between 18 and 24 would bring in pound;4,050, a provider nets pound;13,120 for each ESA claimant they help get into - and remain in - employment. But the risks are also greater, both financially and in terms of the consequences for success rates. Increasing numbers of providers would rather bring in less money than none at all.

The provider procurement process has also caused uncertainty, according to Anton Roe, a director at recruitment company Alderwood Welfare to Work. When the Government awarded the work programme contracts, just 20 per cent went to providers already on the books. This has prompted high job turnover, with many professionals being forced to swap employers to follow the work.

"It affects the relationships with clients," Mr Roe said. "[The process] can take 24 to 30 months; from a client's referral to building up a rapport, getting into work, then staying in contact with the client for 18 months after they've got a job."

The high turnover at providers causes instability for learners, meaning they could be more likely to drop out of work. Providers, it seems, are paying the price for employment factors that are out of their control.

"It will be a long haul before they see any returns from the work programme," Mr Roe said. "The sector was always about helping people get back into work, a caring, social sector; now it has become about payment by results. We did see a couple of companies drop out because they didn't think it was financially viable."

His concerns are shared by David Grailey, chief executive of FE awarding body NCFE. "We feel that the current targets are simply too ambitious, providing a disincentive for many training providers who believe that they cannot make work programme courses pay, no matter how hard they try," he said. "The risk is that, by setting targets too high, the Government will limit the number of providers willing or able to take part and thereby stifle the potential of the programme before it gets off the ground."

The Department for Work and Pensions is unrepentant. "The new work programme has ensured that we move away from a culture of paying large service fees, regardless of how many people are helped, to one which encourages providers to help all jobseekers get into and stay in work," a spokeswoman said. "This approach not only represents value for money for the taxpayer, it gives providers greater rewards and there is no limit to the amount that can be earned by providers who are successful."

But with years to go before they receive their full quota of funding, learning providers will have a long wait to find out whether it was a risk worth taking.

Payments to providers

pound;4,050 for a young person (aged 18-24) on jobseeker's allowance

pound;13,120 for a claimant on employment and support allowance who is enrolled in the work-related activity group.

Original headline: Back-to-work scheme is a risk too far for providers

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